Executive Summary Economist John Hussman recently stated speculative bubbles teach investors “dangerously incorrect lessons” that “stocks always recover.” Stock market indices have turned negative this year, and the dispersion of returns within are disturbing (second graph). The Buffet Indicator (third graph) shows much more room to fall [...]
Executive Summary By now many have heard first quarter real GDP turned negative by 1.4%. In the second graph one can see net exports had the largest negative impact on GDP. Personal expenditures held steady, however may not do so in the second quarter as real disposable [...]
Executive Summary The first graph below is Warren Buffet’s favorite market valuation ratio. Note from current valuations, the S&P 500 would need to fall by 64% to reach the long-term average. While many may think it is not possible, in the last 20 years markets have twice [...]
Executive Summary The Fed’s monetary policy for the last ten years has been characterized as “too loose for too long,” resulting in overvalued equity markets and inflation. Looking at the two graphs below, one can see the overvaluation as shown by various metrics. Statistically, the overvaluation is [...]
Executive Summary The Federal Reserve Bank’s policies including increasing the monetary base and funding the Federal Government’s stimulus programs led to a surge in growth and inflation. (See right side first graph) However, now the Fed is reversing policy stances by raising interest rates and halting QE. [...]
Executive Summary In March of this year the Fed began increasing short-term interest rates. Typically, they do not start rate tightening when consumer sentiment is plummeting (see first graph). At the same time, the Fed usually does not also hold rates so low when inflation is so high [...]
Executive Summary In a healthy economy, long-term interest rates are higher than short-term rates (see first graph). However, when short-term rates are higher than long-term rates (inverted yield curve), it has typically been a precursor to a recession (see third graph). Most people have recognized steep inflation [...]
Executive Summary This week I wanted to share a guest article from John Mauldin. This article is reflecting on the trends that we are seeing popping up that resemble markets of years past. John begins his take by saying, "The Strange Recession we are now entering is [...]
Executive Summary Markets have been reacting significantly on every news headline regarding the Russian/Ukrainian war. The sanctions and supply disruptions could last long past any potential peace deal. Also, the equity markets were selling off this year before the war started as inflation was rising (see first [...]
Executive Summary As discussed in previous newsletters, economic growth is slowing. The Atlanta Fed GDPNow model reduced the first quarter GDP growth estimate to 0.0% from the previously reported .6% estimate. Now with Russia invading Ukraine, the effects of war could further negatively impact growth. Gas prices [...]